From the ICIJ
, in the context of the massive data leaks that we've been blogging, a story noting the efforts of tax justice heroes such as Senator Carl Levin in the U.S. to crack down on offshore tax shenanigans:
"The efforts by Levin and other lawmakers have been opposed by powerful lobbying interests, including the banking and accounting industries and a little-known nonprofit group called the Center for Freedom and Prosperity. CF+P was founded by Daniel J. Mitchell, a former Senate Finance Committee staffer who works as a tax expert for the Cato Institute, and Andrew Quinlan, who was a senior economic analyst for the Republican National Committee before helping start the center."
Read all about TJN's encounters with Mitchell in Treasure Islands
. Now get this:
In filings with the IRS, the center says it has “met with more than 175 Capitol Hill offices on benefits of tax competition.” The center argues that unfettered access to offshore havens leads to lower taxes and more prosperity.
According to records reviewed by The Post and ICIJ, the organization’s fundraising pleas have been circulated to offshore entities that make millions by providing anonymity for wealthy clients, many of them U.S. citizens.
In May 2007, one director of a Hong Kong company that creates offshore trusts sent a CF+P solicitation to contacts in the Cook Islands, pointing out that CF+P was trying to raise $250,000 for a lobbying campaign to “stop the bleeding, build allies and go on the offensive” against efforts in Washington to regulate the industry."
The Cook islands is a particularly mucky jurisdiction, with a high secrecy score of 75
on our index (and a habit of disregarding those few laws that it does have). One offshore practitioner was describing to TJN a few months ago how it was common to hold residential property via a BVI company held by a Cook Islands trust, which can make it very hard indeed for people who have been defrauded to get their assets back. Take a look at this advertisement
for Cook Island trust services, from
Portcullis Trustnet, one of the offshore providers that has been the source of some of these
data leaks. Among other things:
- Foreign judgments are not enforceable;
- A settlor/grantor of a trust is able to retain control over the trust and its property if desired.
Both those are attacks on the tax and legal systems of other jurisdictions. A settlor is supposed to give the assets away into a trust. That's kind of the whole point. If they can still retain control over it, then that's a sham trust. Back to the ICIJ story, which quotes one of those internal emails:
“I personally think the efforts of CF+P should be supported by the Cook Islands given the impact [that] passage of current bills being considered in the USA Congress would have on the jurisdiction and industry,” the director said.
Attached to the e-mail was the proposal from CF+P to “work with Congress and the White House” and explain the “legitimate role that low-tax countries play in protecting financial privacy.”
We have long suspected the CF+P of taking money from murky offshore players, though never had any evidence of this. Some time ago, Mitchell (pictured), who is charming on a personal level, told us that they had received some funding via the "Kochtopus
" (not his words) though he was not specific on whether that was received directly to CF+P or via the Cato Institute, with which it works closely. The CF+P's Andrew Quinlan declined to give a breakdown of their funding base, though defended his fundraising like this:
“I don’t think it matters what percentage of the money comes from which donor,” Quinlan said. “There are huge offices on K Street that lobby on behalf of interests that are outside the United States. We’re just trying to be as effective as we can be.”
So that's alright then. We have been foes of CF+P for years, though that isn't to say that we disagree with them on everything:
“The United States is one of the biggest tax havens in the world,” Mitchell said.
Quite so. There is hypocrisy here, but of course that doesn't absolve either party of guilt.